2023-05-07 11:12:01
Savings rates have crept up in a year’s time, following the European Central Bank (ECB) gradually increased interest rates. Saving has become a little more attractive. But interest rates are slowly rising and inflation is far from making you rich from savings.
Savings interest rates, like interest rates for mortgages or other loans, are strongly influenced by the interest rate of the European Central Bank (ECB). It is trying to fight inflation and has therefore raised interest rates seven times in less than a year. That happened last Thursday.
The ECB interest rate, which was still negative last year, is now far from sight. And now there is not a single bank in the Netherlands with 0 percent interest on the savings account, researchers from MoneyView recently concluded in their Spaarrente Barometer. Banks are gradually increasing their savings interest rates.
Large banks ABN AMRO, ING and Rabobank did this once more at the beginning of May for freely withdrawable savings. They all offer 0.75 percent (at ING this rate applies up to 10,000 euros, at Rabobank up to 100,000 euros). That is already a lot higher than the 0.01 percent they still counted until November. But it is not yet a lot of money with those interest rates.
Banks increase the margin on their interest rates
Customers of large banks are usually loyal savers. This ensures that those banks do not have to offer very tempting rates to attract savings. Moreover, it appears that since 2022, banks are earning more from the difference between interest rates for savings and loans. They raise interest rates on savings that they pay more slowly than the interest rates they receive on loans and mortgages, DNB economist Jorien Freriks observed in April.
Smaller banks already offer a bit more. The highest interest rates rise to 2.3 percent and often come from foreign parties. Think of Open Bank, a subsidiary of the Spanish bank Santander, the Estonian BIG Bank or the Turkish Yapi Kredi Bank. Savings platform Raisin also lets you open accounts remotely at banks in Sweden, Estonia and France, for example.
The high interest rates also include non-banks such as the German Scalable Capital and the Irish-German Trade Republic. For example, they have a savings interest for the contra account of an investment account.
Do not withdraw unlimited money or receive your interest later
There are sometimes restrictive conditions compared to the more well-known banks. A price fighter like bunq, for example, only allows you to withdraw money twice a month. And it differs how quickly banks pay your interest, following a month, quarter or only at the end of the year. You also have to close a current account with some banks, which costs money.
Some foreign banks fall under a different deposit guarantee scheme than the Dutch one. In many European countries, savings of EUR 100,000 are guaranteed through this system, just like in the Netherlands. You get that back in the event of bankruptcy. This is sometimes different outside the eurozone. It may also be that it is a bit more complicated to get your money back than in the Netherlands.
Lock your money up for a longer period of time for a higher interest rate
Lock your money in a term deposit for longer now that interest rates have risen? That can earn you more interest. You can get up to 3.5 percent interest for one year, but that is with small foreign banks. The highest interest rate at a Dutch bank is 2 percent and ABN AMRO offers the most of the major banks at 1.4 percent. With a 5-year deposit you can get a little more interest. Up to almost 3.7 percent for foreign providers, up to 2.5 percent for Dutch providers.
When you tie up your money, you cannot access it and you take the gamble that interest rates will not rise much further in the coming period. That does not seem very logical, given that even more interest rate hikes are expected at the ECB and banks will therefore probably raise their savings interest rates further next year.
Higher interest rates, but also higher inflation
Interest rates are much higher than usual in recent years. For freely withdrawable savings, 0.01 or 0.1 percent was normal at large banks and the interest rate did not exceed 1 percent if they were held for longer. Now rates are much higher, but so is inflation. Your money is therefore worth less despite the interest.
Yet even now, saving is not necessarily for the stupid. With investments or cryptocurrencies, you can lose a lot of money in a year, as it turned out, for example, in 2022. Share prices fell by tens of percent and bitcoin lost 65 percent.
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